Venezuela: Poster Child for Socialism

[Muda69]

https://mises.org/wire/venezuela-poster-child-socialism

Quote

There is no more recent example of the many theoretically apparent pitfalls of socialism coming to life than in Venezuela. The South American nation is but the latest example on the long list of countries to have fallen victim to the siren’s song of a socialist utopia. While over the past decade journalists like Michael Moore, politicians like Bernie Sanders and economists like Joseph Stiglitz have praised the so-called socialist “economic miracle” in Venezuela, with hyperinflation now leading to starvation and millions fleeing the country, it is inarguable that these praises were premature and wholly unwarranted.

Unfortunately, economist turned political hack Paul Krugman still to this day carries on the tired line that the Venezuelan government simply “mismanaged” and are corrupt, and will not admit that this situation arose from problems inherent to socialist ideals and policy. I aim to show how feeble this line of thinking is. What’s more, what may be the final months of the Maduro government are serving as a reminder of how even socialist regimes ironically rely heavily on the successes of capitalism to maintain the last vestiges of their socialist society.

....

Many still to this day will not admit that the devastation witnessed in Venezuela is a problem inherent to Socialism. They claim that Venezuela is not a model of “true socialism”, but of autocracy, and blame the ills of the government and economy on corruption. However, it has long been evident that the historical correlation between the rise of tyrannies and state-run socialist economies are actually causal relationships. As Mises stated, “The idea that political freedom can be preserved in the absence of economic freedom, and vice versa, is an illusion.” Decades before Venezuelan’s were planning their revolution Mises had already observed that, “Tyranny is the political corollary of socialism, as representative government is the political corollary of the market economy.” To suggest otherwise is to ignore economic and political history.

...

Ironically for the socialists, the absence of the very profit motive for which they vilify under capitalism leads to the perverse incentives and lack of accountability in socialist bureaucracies which sow the seeds of corruption and tyranny in government. Inefficiency, corruption, graft, and tyranny are therefore features of socialism, and are not something that can be avoided if only “true socialism” were tried once more. It’s not that “true socialism” – the socialist utopia of prosperity under shared ownership of the means of production – hasn’t been the goal of many failed states like Venezuela, it’s just that it’s an inherently impossible outcome from enacting socialist policy.

The Myth of the Venezuelan Resource Curse

One such Venezuelan bureaucracy that plays a key role in the Venezuelan economy is Petróleos de Venezuela, S.A., which is more commonly referred to as PdVSA. PdVSA is Venezuela’s state-owned oil and natural gas company that serves as the largest source of government revenues due to its production and exportation of crude oil. Venezuela has the largest proven oil reserves in the world, accounting for nearly 300 billion barrels of oil. The nation is also rich in other precious natural resources such as gold. This may lead one to ask, why then does a country so rich in natural resources continue to suffer such economic hardship?

...

The supposed resource curse in Venezuela, properly described, is then nothing more than another example of the failure of socialist bureaucracies in their effort to try and function like market economies. Placing resources in the hands of “the people,” really means placing it in the hands of the government and its cronies. Furthermore, in centrally planned socialist economies such as Venezuela, where many individuals obtain their incomes in groups that compete over government revenue, it would seem to necessarily follow that corruption, graft, and a class of politically connected elites would grow at the expense of the rest of society. In political science terms, it breeds clientelism, or the exchange of goods and services for implicit or explicit political support. In fact, recent research has suggested that not only may the resource curse not exist, but that a clientelist economy may actually be a prerequisite for supposed resource curse outcomes.

...

Trade in the Final Days of the Revolution

Last July, Major General Manuel Quevedo – the career military officer who had been made president of PdVSA – met with a Catholic priest and a gathering of PdVSA workers and officials at the PdVSA headquarters for a prayer ceremony in hopes that God would help boost Venezuelan oil output. But not even calls to God could reverse the economic misfortune that follows when you place industry in the hands of military officials and socialist sympathizers.

What followed was increasing economic and political disarray throughout 2018. With little choice left, the Venezuelan government quietly reversed the two-decade drive to nationalize the oil industry and began hiring outside firms to help maintain the last bit of operations at the state owned oil giant. This comes less than a year after Maduro was quoted saying, “I want a Socialist PDVSA. An ethical, sovereign and productive PDVSA. We must break this model of the rentier oil company.”

While it is true that the Venezuelan government and economy has grown dependent on loans from their more ideologically aligned geopolitical allies China, India, and Russia over the past decade, their ideological adversary – the US – has been by far the largest buyer of the oil that finances the Venezuelan government. The US imported nearly 500,000 barrels per day of Venezuelan crude in 2018, accounting for nearly 40 percent of total Venezuelan exports and up from 34 percent of total Venezuelan exports in 2017. Given that Venezuela is greatly indebted to many of its other largest buyers like China and India, exporting oil to these countries only pays down debts and does not help meet needs for additional funding. As such, the US is thought to account for 75 percent of the total cash that Venezuela receives for their crude exports.

What’s more, Venezuelan oil is far too heavy or thick to flow through pipeline and export infrastructure without having diluent - or refined light oil products like gasoline - to blend with its crude to reduce its viscosity. In the past, PdVSA created their own diluent at their own refineries. But with nearly the entire refining base going offline after years of bureaucratic mismanagement, in 2018 Venezuela increasingly turned to refiners in the US to supply the oil products that would allow them to continue to produce and export crude. The US supplied nearly 80 percent of the total diluent imported into Venezuela in 2018. While Venezuela can source this from elsewhere globally, it would come at a higher cost than procuring the geographically proximate US supply.

So, what happened when socialist Venezuela ran up debts to their socialist allies globally and were starved of income and the inputs their industry depends on? Ironically, but not surprisingly, they turned to the supposed evil capitalist country that Maduro blames for their economic misfortune. As global pressure mounts against Maduro and his government, we can only hope for the people of Venezuela that the country will truly turn away from the anti-capitalistic mentality that led them to this point. The true problem in Venezuela will not simply resolve with a bail out by the IMF or World Bank. There must be a resolution from within the Venezuelan people to turn away from socialism. As Mises so astutely observed, “The problem of rendering the underdeveloped nations more prosperous cannot be solved by material aid. It is a spiritual and intellectual problem. Prosperity is not simply a matter of capital investment. It is an ideological issue.”

Fantastic analysis of the failures of socialism.  Too bad there are some who will ignore history and just try to repeat it..................

 

[swordfish]

[foxbat]

50 minutes ago, swordfish said:

So the US, when it had its Civil War, was also an admission that democracy doesn't work?

[swordfish]

44 minutes ago, foxbat said:

So the US, when it had its Civil War, was also an admission that democracy doesn't work?

Are you serious? 

BTW - The US is a Republic.....Which the Civil War was fought to save.....

[gonzoron]

35 minutes ago, swordfish said:

BTW - The US is a Republic

As was the USSR. As is Cuba, China, North Korea, Vietnam, Uganda, Afghanistan. It's a pretty long list.

[foxbat]

40 minutes ago, swordfish said:

Are you serious? 

BTW - The US is a Republic.....Which the Civil War was fought to save.....

Actually, I'm quite serious if your meme was serious. 

I was pointing out that, in the broader schemes of things, that if the measurement for claiming that something doesn't work is that there's a problem, then the US is certainly in that same boat.  BTW, doesn't matter if it's a democracy or republic ... if part tries to break away, obviously it was considered a "failure" for enough to turn it into a war.

[Irishman]

1 hour ago, swordfish said:

Are you serious? 

BTW - The US is a Republic.....Which the Civil War was fought to save.....

Could the point also be argued that a factor in the Civil War was a fight over States having rights over the larger federal authority, and vice versa?

[foxbat]

2 minutes ago, Irishman said:

Could the point also be argued that a factor in the Civil War was a fight over States having rights over the larger federal authority, and vice versa?

Depends on which side of the Mason-Dixon line you're standing on.

[Muda69]

17 hours ago, foxbat said:

Depends on which side of the Mason-Dixon line you're standing on.

https://medium.com/@jonathanusa/everything-you-know-about-the-civil-war-is-wrong-9e94f0118269

Quote

...

To understand how the war began, we should begin with the words of Abraham Lincoln.

“I have no purpose, directly or in-directly, to interfere with the institution of slavery in the States where it exists. I believe I have no lawful right to do so, and I have no inclination to do so. Those who nominated and elected me did so with full knowledge that I had made this and many similar declarations and had never recanted them,” Lincoln said in his first inaugural on March 4, 1860. (3)

While promising not “to interfere with the institution of slavery,” Lincoln also argued, “no State upon its own mere motion can lawfully get out of the Union.”

Then he threw down the gauntlet against rebellion.

“In doing this there needs to be no bloodshed or violence, and there shall be none unless it be forced upon the national authority. The power confided to me will be used to hold, occupy, and possess the property and places belonging to the Government and to collect the duties and imposts; but beyond what may be necessary for these objects, there will be no invasion, no using of force against or among the people anywhere.” (Emphasis mine)

Lincoln argued that secession was legally and constitutionally impossible, a view that stood in stark contrast to his stated beliefs while a member of Congress just twelve years prior.

In a speech in the House of Representatives regarding the war with Mexico, Lincoln argued in favor of secession.

“Any people anywhere, being inclined and having the power, have the right to rise up and shake off the existing government, and form a new one that suits them better. This is a most valuable, a most sacred right — a right which, we hope and believe, is to liberate the world. Nor is this right confined to cases in which the whole people of an existing government may choose to exercise it. Any portion of such people that can may revolutionize, and make their own of so much of the territory as they inhabit.” (4)

Perhaps his views changed between his time in Congress and becoming president. But it’s doubtful given his involvement in the creation of the state of West Virginia during the Civil War, which provided his party additional electoral votes and congressional representation — an act Lincoln’s own attorney general believed was unconstitutional.

In a December 1862 written statement, Attorney General Edward Bates declared, “I observe, in the first place, that the Congress can admit new States into this Union, but cannot form States: Congress has no creative power, in that respect; and cannot admit into this Union, any territory, district or other political entity, less than a State. And such State must exist, as a separate independent body politic, before it can be admitted, under that clause of the Constitution — and there is no other clause.” (5)

It seems that Lincoln wasn’t opposed to secession if it served his political purposes. But now as president of a divided country, he was facing a challenge of potentially dire economic consequences: Should the Southern states have been allowed to leave the Union unmolested, they would have taken with them millions in tax revenues.

After the first states seceded, many in the Northern press expressed opposition to war with the South. Writing in the New York Tribune, Horace Greeley declared, “We hope never to live in a republic where one section is pinned to the residue by bayonets.” (6)

The Tribune was among the great newspapers of its time, an influential journal of the Republican party, and Greeley was among the day’s opinion leaders.

Moreover, many of Lincoln’s advisors also recommended against any action that might lead to a war with the South. Even Lincoln’s top Army commander wanted nothing to do with war. “Let the wayward sisters depart in peace,” urged General Winfield Scott.

Secretary of State, William Seward, also advised the new president to let the rebellious states go and avoid actions that could upset the states of the upper-South. He thought that eventually, the aggrieved states would see the error of their ways and campaign for reunification. “I do not think it wise to provoke a Civil War beginning in Charleston and in rescue of an untenable position,’’ Seward insisted.

But it didn’t take long before Northern newspaper editors did the math and realized what secession really meant for Northern enterprises. In addition to the loss of tax revenue, the South’s free trade position would’ve had dire consequences for Northern ports.

....

Viewing the Civil War as a crusade to end slavery is simply not correct; abolitionists never accounted for more than a sizeable minority in the North. The cause of war in 1861 wasn’t slavery. It was about the loss of millions in tax revenues.

Money and power.

 

[Muda69]

[gonzoron]

If you look at World History, monarchies have been the most successful.

[Muda69]

1 hour ago, gonzoron said:

If you look at World History, monarchies have been the most successful.

Using exactly what measurements of "success"?

 

[gonzoron]

25 minutes ago, Muda69 said:

Using exactly what measurements of "success"?

 

Longevity without degradation of effectiveness 

[Muda69]

2 minutes ago, gonzoron said:

Longevity without degradation of effectiveness 

Ok. Now define "effectiveness".

 

[gonzoron]

13 minutes ago, Muda69 said:

Ok. Now define "effectiveness".

 

Longevity defines effectiveness.  If you disagree with my statement, prove it wrong. Let's hear some of your actual views.

[Muda69]

9 minutes ago, gonzoron said:

Longevity defines effectiveness. 

I don't believe quantity, or in this case longevity, always equals "effectiveness".  Sure, empires and monarchies have existed for centuries, but at what cost to personal freedom and liberty?  IMHO that kind of 'effectiveness' is never worth the cost paid for it.

 

[Guest]

3 hours ago, Muda69 said:

I don't believe quantity, or in this case longevity, always equals "effectiveness".  Sure, empires and monarchies have existed for centuries, but at what cost to personal freedom and liberty?  IMHO that kind of 'effectiveness' is never worth the cost paid for it.

 

Have to reply to quote, only to say I ran out of likes\thank you s to give!

[DanteEstonia]

5 hours ago, Muda69 said:

Using exactly what measurements of "success"?

 

Keeping a nation together? Repealing invaders? Not descending into anarchy?

[Muda69]

1 minute ago, DanteEstonia said:

Keeping a nation together? Repealing invaders? Not descending into anarchy?

Again, at what cost to personal freedom and liberty?

 

[DanteEstonia]

Just now, Muda69 said:

Again, at what cost to personal freedom and liberty?

 

Doesn’t matter- nation survived.

[Muda69]

1 minute ago, DanteEstonia said:

Doesn’t matter- nation survived.

And of course the King, a position that you appear to personally covet, stays fat and happy.

"Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety." - Benjamin Franklin

[Muda69]

The truth about socialism: It doesn't care about the middle class. It's about keeping the ruling class' power: https://www.foxnews.com/opinion/the-truth-about-socialism-it-doesnt-care-about-the-middle-class-its-about-keeping-the-ruling-class-power

Quote

Q: What did socialists use before candles?

A: Electricity.

It’s an old joke, sure. But it’s no laughing matter. Just ask the people of Venezuela.

The socialist regime there nationalized the electricity sector a dozen years ago. Today, blackouts in the once-prosperous Latin American nation have become routine. Electricity isn’t all that’s in short supply. Gasoline is scarce in the oil-rich nation, as are food and medicine.

Meanwhile, the regime concentrates on violently repressing protests and burning humanitarian aid as it approaches its borders

After 20 years of socialism, Venezuela is a failed state.

And that should surprise no one. Socialism is a rigid ideology that always ends in tyranny.

The prime example is the Soviet Union. Lenin and Stalin’s iron rule brought death to 20-25 million victims. “Enemies of the state” were executed by firing squads, sent to forced labor camps in the Gulag, perished in country-wide forced famines, experimented on in “psychiatric” hospitals, and summarily deported from their homes to the distant steppes of Russia.

No less totalitarian in their practices were the Castro brothers, who promised freedom and democracy when they came to power in Cuba. Six decades later, the Cuban people are still waiting for the first free election.

Socialism always promises progress, but it inevitably delivers scarcity, corruption and decay.

Eastern Europe under communism became a monument to bureaucratic inefficiency and waste. Throughout the Soviet bloc, life expectancy declined dramatically and infant mortality soared.

Upon gaining independence, India trod a socialist path for 40 years. It led to a never-ending cycle of poverty and economic deterioration. Finally, Indian leaders began looking to Adam Smith rather than Karl Marx to guide their economy. Today, it boasts the largest middle class in the free world.

Socialism has little regard for the middle class. It’s all about securing and maintaining power for the ruling class.

Consider the People’s Republic of China. Mired in Maoist revolutionary rhetoric, it was one of the world’s poorest countries for its first three decades. Then, Deng Xiaoping introduced “socialism with Chinese characteristics.”

Forty years later, the PRC boasts the world’s second largest economy, but its citizens remain deprived of basic human rights and civil liberties.

The Communist Party does not allow a free press or free speech, competitive elections, an independent judiciary, free travel or a representative parliament. Instead, President Xi Jinping has instituted a cult of personality that rivals the one-time worship of the so-called Great Helmsman, Mao Zedung.

Nicaragua’s Marxist leader Daniel Ortega is another example of the lust for power and control that characterizes socialism. His under-reported reign of terror has resulted in the deaths of more than 300 dissidents in just the last few years.

All of these horrors are inevitable because socialism is built on a fatal conceit.

Modern socialists believe that the world has become so complicated, so complex, so globalized, that regular citizens just can’t manage things. We, and only we (say the socialists) are equipped to run things. Hence, for example, it’s imperative to nationalize health care, since “the little people” can’t be trusted to make intelligent, informed decisions about their health care.

Rather than empower the common man, socialists believe in empowering bureaucracy. In their minds, bureaucrats will always make decisions based on science and dispassionate reason – and make sure those decisions are implemented and enforced efficiently.

It’s an elitist, intellectually arrogant belief, and it’s dangerous. As Ronald Reagan noted in a long-ago campaign speech for Barry Goldwater: “Either we accept the responsibility for our own destiny, or we abandon the American Revolution and confess that an intellectual [elite] in a far-distant capitol can plan our lives for us better than we can plan them ourselves.”

In “The Road to Serfdom,” the Nobel Laureate F. A. Hayek dismissed the utopian dream of “democratic socialism” as “unachievable.” Why? Because it is based on the fatal conceit that a galaxy of bureaucrats can collect, analyze and direct the individual actions of 300 million Americans.

“America will never be a socialist country!” So President Trump declared last month in his rousing State of the Union speech. That should be the fervent prayer of all Americans who prize liberty and wish to live our lives our way.

 

 

Edited March 5, 2019 by Muda69

[DanteEstonia]

2 hours ago, Muda69 said:

The truth about socialism: It doesn't care about the middle class. It's about keeping the ruling class' power: https://www.foxnews.com/opinion/the-truth-about-socialism-it-doesnt-care-about-the-middle-class-its-about-keeping-the-ruling-class-power

 

 

Ironic that this country pioneered government owned utilities.

[Muda69]

1 hour ago, DanteEstonia said:

Ironic that this country pioneered government owned utilities.

The government asserts a coercive monopoly over many of the services in this country. For instance, the United States Government prohibits any other party from delivering mail. So, if libertarians make use of the U.S. postal service (which is financed by everyone), it isn't dishonest of them, because they have no choice. (E.g., See what happens when libertarians try to opt out and create their own services: American Letter Mail Company. The government shuts them down.)

That said, will the new levels of socialism imposed by the Green New Deal allow me to own my own wind and/or solar farm so I no longer have to use government owned utilities, aka "go off the grid"? How about my own small nuclear reactor?

 

 

[Bobref]

On 3/1/2019 at 10:53 AM, gonzoron said:

If you look at World History, monarchies have been the most successful.

Plato wrote that the best form of government was a “benevolent dictatorship.”